What is the difference from a Bank to a Credit Union? This difference saves you $10,000’s!
Bank and Credit Unions are virtually identical, with respect, to the services rendered. They both provide daily banking, investments, loans, mortgages, credit cards, business financing, commercial lending, etc. However, the major difference lay in the business model itself. Each type of institution is a corporation, however one is publicly traded and the other is not – therein lies the fundamental difference. This difference creates major variation in policy that, very much, affects your life (ie. the amount of money you get to keep from working). Below is an easy to understand narrative on the difference:
Cameron: “Do you know the difference between a Credit Union and a Bank?”
Public (client): “No not really, isn’t that those things where you have to have a lot of money or great credit?”
Cameron: “Actually, no it is not. You can have $20 to your name and as long as you don’t owe anyone $10,000’s and never paid them back, you are good to go.”
Public (client): Oh, I didn’t know that.”
Cameron: “Here, I will teach you how to save $10,000’s over the course of your life or more, would you like that?”
Public (client): “Yes!”
Cameron: “You are familiar with McDonalds, right?”
Public: “Of course.”
Cameron: “Right, you would agree that fast food is healthy right?”
Public: “LOL no, it is not good for you.”
Cameron: “So, fast food is not healthy, they are big PUBLICLY TRADED corporations, right?”
Cameron: “So we have agreed the food is bad for us (the consumers) – so what is important to the people (Shareholders & Executive) who own and run these fast food corporations, if our welfare/health is not?”
Public: “Making lots of money.”
Cameron: “Bingo! Now imagine if one of the requirements of being an owner of a fast food corporation was that you have no choice but to eat the fast food you provide to the public/consumers/us – every day of your life? Do you think the food might be a little more healthy and good for you considering the owners, also, would face serve health risks because they have to eat the food too?”
Public: “Of course!”
Cameron:”Ok, well, the difference between a big bank (publicly traded corporation) and a credit union (non-publicly traded corporation) is no different.”
Cameron: “To be an owner of a big bank, means you do not have to have your personal assets (money) in the institution you own (ex. you don’t have to eat the fast-food like McDonalds owners don’t have to eat McDonalds); whereas with a credit union (non-publicly traded corporation) the only way you can be an owner of the Credit Union is to actively have your money in the credit union (eating the fast food), which mean that your money is directly affected by the policy of the credit union.
Owners get to design the business they way they want (like at work your boss tells you what to do, right), why would they design it to penalize themselves?
Just like was discussed with the fast food owner if he HAD to eat his own food everyday, maybe the food would be healthier, right – of course it would!?
In the financial world, healthy means, customer gets to keep more of their money. This is why Credit Unions have way lower fees and penalties because all the clients own the credit union and want to have more money so they create the policy differently then the owners of the Big Bank who do not have to “eat the fast food everyday – ie. be active clients – therefore policy to client base is irrelevant to them financially speaking.” Credit Union owners have to eat the fast food (banking policy) – so the food (banking policy) is way healthier (clients keep more of their money).”
This fundamental difference in business model – creates far lower fees, penalties, and differing advice for clients/owners of Credit Unions – thereby allowing you to keep more of your hard earned money!